About the author

Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan's Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

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Why socialism always fails

Slightly more than 20 years, I wrote the article “Why Socialism Failed” and it appeared in 1995 in The Freeman, the flagship publication of the Foundation for Economic Education. I think it was the first essay or op-ed I wrote for a general audience following graduation in 1993 from George Mason University with a Ph.D. in economics. Note that the title of the article (“failed”) implied the past tense, as if I perhaps assumed the failures of socialism were so apparent and obvious (I called it the Big Lie of the 20th century) that it would be forever considered only as a discredited system of the past, and never as a viable option going forward into the future! Of course, at the time many parts of the world were moving away from collectivism and central planning and towards free market capitalism – the Soviet Union collapsed in 1991, the Berlin Wall came down in 1989, and China was opening up its economy and re-established the Shanghai Stock Exchange in 1990, etc.

Given the recent resurgence of socialism, especially as it is now being embraced by young Americans, I thought it might be a good time to re-visit my 1995 essay to review why socialism: a) failed in the 20th century, b) is failing in the 21st century (e.g. Venezuela, see photo above), and c) will always fail. And that’s because it’s a flawed system based on completely faulty principles that aren’t consistent with human behavior and can’t nurture the human spirit.

Here’s are some excerpts of my 1995 essay “Why Socialism Failed”:

1. Socialism is the Big Lie of the twentieth century. While it promised prosperity, equality, and security, it delivered poverty, misery, and tyranny. Equality was achieved only in the sense that everyone was equal in his or her misery.

In the same way that a Ponzi scheme or chain letter initially succeeds but eventually collapses, socialism may show early signs of success. But any accomplishments quickly fade as the fundamental deficiencies of central planning emerge. It is the initial illusion of success that gives government intervention its pernicious, seductive appeal. In the long run, socialism has always proven to be a formula for tyranny and misery.

A pyramid scheme is ultimately unsustainable because it is based on faulty principles. Likewise, collectivism is unsustainable in the long run because it is a flawed theory. Socialism does not work because it is not consistent with fundamental principles of human behavior. The failure of socialism in countries around the world can be traced to one critical defect: it is a system that ignores incentives.

In a capitalist economy, incentives are of the utmost importance. Market prices, the profit-and-loss system of accounting, and private property rights provide an efficient, interrelated system of incentives to guide and direct economic behavior. Capitalism is based on the theory that incentives matter!

Under socialism, incentives either play a minimal role or are ignored totally. A centrally planned economy without market prices or profits, where property is owned by the state, is a system without an effective incentive mechanism to direct economic activity. By failing to emphasize incentives, socialism is a theory inconsistent with human nature and is therefore doomed to fail. Socialism is based on the theory that incentives don’t matter!

2. The strength of capitalism can be attributed to an incentive structure based upon the three Ps: (1) prices determined by market forces, (2) a profit-and-loss system of accounting and (3) private property rights. The failure of socialism can be traced to its neglect of these three incentive-enhancing components.

3. By their failure to foster, promote, and nurture the potential of their people through incentive-enhancing institutions, centrally planned economies deprive the human spirit of full development. Socialism fails because it kills and destroys the human spirit–just ask the people leaving Cuba in homemade rafts and boats [and those waiting in long lines today in Venezuela struggling, and often failing, to buy food].

4. The temptress of socialism is constantly luring us with the offer: “give up a little of your freedom and I will give you a little more security.” As the experience of this century has demonstrated, the bargain is tempting but never pays off. We end up losing both our freedom and our security.

Socialism will remain a constant temptation. We must be vigilant in our fight against socialism not only around the globe but also here in the United States.

The failure of socialism inspired a worldwide renaissance of freedom and liberty. For the first time in the history of the world, the day is coming very soon when a majority of the people in the world will live in free societies or societies rapidly moving toward freedom.

Capitalism will play a major role in the global revival of liberty and prosperity because it nurtures the human spirit, inspires human creativity, and promotes the spirit of enterprise. By providing a powerful system of incentives that promote thrift, hard work, and efficiency, capitalism creates wealth.

The main difference between capitalism and socialism is this: Capitalism works.

Discussion:
(162 comments)

“The failure of socialism in countries around the world can be traced to one critical defect: it is a system that ignores incentives.”

Prof. Perry wrote this twenty years ago, but now it seems that progressive socialists don’t ignore incentives, but instead make them out to be harmful

In Seattle, the intrusive minimum wage being imposed effectively eliminates tipping in restaurants, because of the push to equalize of wage floors.

It’s interesting that in Cuba, which has somewhat encouraged small business start-ups, that the most desirable new jobs are those of tipped employees in restaurants. Those not hired complain that they are being shut out of a great opportunity to make better wages.

Thanks Mark, the current brand of socialism being touted in the U.S. as democratic will be no different. It fails the people who it purports to help, but recovering lost incentives will be painful if its grip captures a naïve new generation.

To be fair, if South Korea had crippling economic sanctions placed on it as well, it would be faring about the same as the north, so pretty poor analogy given in your argument.

Also many people corrupt capitalism with pro-business. The US is a prime example of this, they’re pro business which damages the free market with subsidies.

Centrist governments have proven the most stable, utilize crown corporations to enter markets as a player that can help influence the market rates rather than flat-out building restrictions/laws on all and also helps generate revenue (if done right) to offset the need for increased taxes.

Pro business is bad? There is ZERO percent of the American economy that is not produced by business, zero, as in not a dime. All government contracts are given to business, even 1 or 2 people working together is a business.
The ignorance of economics that those that spout hatred about “business” have is simply unbelievable,

You want an economy, BUSINESS is the basis of ANY free market economy. Oh, you would like socialism, well then the government will make all those choices for you, in terms of what products you can have. Democratic socialism, there is no such thing, the term itself is an oxymoron.

This thread is bogged down in “all or nothing” territory. The initial post attempts to frame the debate that way. The US has social security–does that make us a socialist country? Does Medicare make us socialist? The US is, sensibly, a capitalist economy with some functions run by the government. The meaningful debate is about which functions the should be govt run, and how. This “all or nothing” thing is just mental masturbation–feels good but doesn’t get anything done.

The concept of democratic socialism is the concept in which this country was founded upon. “Of the people, by the people, for the people” sound familiar?
Just because its development has been hindered, deviated, and disregarded by many of those we have trusted to implement it, does not mean it hasn’t existed. Our history brings us to the times of FDR as an example of the concept understanding and its consequential implementation. Never an oxymoron.

Ian, that is incorrect. If South Korea had economic sanctions placed upon it commensurate with what has been placed upon the North (which are countermanded to large degree by quiet cooperation from China) it would affect the economy, true, but not much. I know what I am talking about.

NK suffers economic sanctions because basic commodities that should be made accessible to the public are corralled for the sake of the military.

‘To be fair’ — if South Korea threatened to invade North Korea, or sent artillery fire and missiles into North Korea and against North Korean naval vessels, or developed nuclear weapons against all current treaties and international law, then one would demand the same sort of economic sanctions against South Korea as those in place against the North.

Centrist governments have been the most stable because they are the most stagnant. The huge bureaucracy, which controls every aspect of life in those countries unfortunate enough to be saddled with socialism, is more concerned with having a collection of small empires within the system rather than a truly cooperative working relationship. That is true to some extent in ALL forms of government, but is a LARGE motivator of the bureaucrats in socialist countries. The more power one holds in government, the more perks one gets. THAT’S the incentive for socialists — to have better things than the rank and file (or as they say, ‘proles’).

Most Americans don’t even like the word socialism but don’t know how to fight what amounts to corporate socialism.. Republican/ conservative narrative speaks about free markets , personal resposability, states rights, to name a few, but Washington Republicans use lobiest to manipulate markets, force citizens to purchase insurance, ship jobs over seas, etc.. They will not willingly give up power anymore then the progressive.. Citizens United has changed “We The People” into We the corporation.. News Agencies are bought and paid for on every election cycle.. What are we suppose to do this side of revolution..I have voted Republican all my life. Will never vote for a Washington insider again regardless of party.. We pay 34% off the worlds military budget, 17 trillion in debt , 1 trillion spent in the Middle East .20 million jobs to China, 20 million illegals here driving down wages.. And you wounder why Americans are embracing Socialism?.?

The reason jobs shipped overseas is also traced to union price fixing wages at point of no profit (socialism) to gov control by reg (socialism) as well as abusive taxes (not capitalism). Once we live up to global economy and true capitalism (we have abundant cheap energy…use it) We would win.

Ya because asking corporations to pay extra taxes to clean their chemicals out of our drinking water

Only a fool thinks that what politicians are using taxes for.

the wealthy elite to pay taxes on thei 2nd summer home is totally wrong

It is absolutely wrong. Rationalizing your greedy and covetous nature by claiming you have a right to other people’s stuff simply because they have more stuff (because they were more productive) than you is in fact wrong.

“Union price fixing?” Union contracts are negotiated with management. There is no contract with a union that wasn’t settled by mutually agreed processes between the two parties. If union labor is paid too much, management agreed to it somewhere….

The reason jobs shipped overseas is also traced to union price fixing wages at point of no profit (socialism) to gov control by reg (socialism) as well as abusive taxes (not capitalism). Once we live up to global economy and true capitalism (we have abundant cheap energy…use it) We would win.

Socialism will take root because people look at the surface and not the root cause, like you. Obamacare forces people to buy insurance even if part of that insurance is against their religion. Jobs are shipped overseas because the Democrat aligned unions want and have gotten too much. Evidenced by the breaking of the bank in various states like Illinois. They want illegal aliens to make up the difference or a tomato would cost $5. And since we have a ridiculous corporate tax rate the money stays overseas to the tune of trillions of dollars. Keep raising taxes and we will all be Detroit. And Under Comrade Obama our military has been cut in half but our debt has doubled. It ain’t going to the military slick.

I think the issue with which you’re concerned is crony capitalism. That is practiced by both parties and is something we should demand our representatives stop because it is at its core similar to fascism since it works to shut out small business and allows government to regulate the big corporations. The dirty little secret is that it’s the big corporations writing the regulations.

There is a similar feeling of dissatisfaction in the UK. I think it boils down to an ever increasing amount of ill-feeling towards the selfishness of capitalism. This sentiment should be applauded. I think it’s wrong to categorise, or even name, these systems because it implies they live in distinct spaces rather than on a spectrum. Capitalism might be a more successful system than socialism, and I believe it is for all of the listed reasons, but it would be erroneous to believe that we know the final destination of capitalism. The dissatisfied youth, I believe, fear the snowball of capitalism is becoming an avalanche. If an idealistic, socialist movement helps capitalism to look at itself in the mirror and unbutton its top button, then I say that’s a good thing.

JM: Your comment, seems to me, presupposes that the Western world is actually using a capitalist system. It is not in the U.S. and even more so not in the U.K. We currently have a mix of socialism and crony capitalism where government picks winners and losers and regulates out of business those who would not grease the palms of elected officials in one way or another. I find it amusing when some criticize capitalism when it has, by and large, not been used recently in any western country that I can find.

Welfare is not charity. You get no credit for voting someone else’s paycheck. To do so is selfishness in its worst form. Only your own time, talent, and treasure can be considered charity.

Making it easier to get by on a Grade-school education or equivalent will not reduce the population willing to try. This is the fundamental concept that liberals fail to see. Supply and demand takes over, even in this sense. They fail to see two steps ahead–worst chess players ever….

The “one-size-trophy-for-all-participants” mentality is killing the American Competitive Edge.

Beware the political party that survives only by increasing the population of poor voters. They have someone’s interests in mind, just not yours.

This is very interesting, and if u really contemplate what this writing says,it makes complete sense and puts today’s current election in complete perspective, as well as opening my mind to alternatives to what I had been thinking. THX for the opportunity to think out of “my” little box that I live in.

Under socialism, there are incentives, however, they are perverse, favoring consumption over production, favoring political action over market action, attracting sociopathic personalities to the political center.
The favoring of consumption over production increases scarcity which leads to greater conflict over the allocation of dwindling resources.

There are plenty of incentives under socialism, but they are all the wrong ones for a prosperous and harmonious society.

Dr. Perry calls himself as an economist (I suspect he WOULD be ashamed to be referred to as an academic), and no matter how much diverse academic thought with which you surround it, socialism is a perverse economic system because it allocates resources in a terribly inefficient manner.

Considering that “Stalin” is not mentioned at all in the piece, and rather he uses a variety of both theoretical and empirical examples from many self-defined socialist countries around the world, I’m not really sure what your objection is.

Amen. What a silly article. It claims to be addressing young Americans and then refers only to extreme versions of socialism instead of the western Euroean variety that actually seems to be attracting them. It’s either dishonest or embarrassingly simplistic for a PhD. One could just as easily point to a few bad examples and say democracy stinks too

I read this one article not long ago written by a former UK police officer who married a danish woman and moved to denmark. He wrote about his experience (he expected a great one from what’s told). But what he found was a brainwashed society with not drive, no goals, and a very abused welfare system (people get their free college the move out of counrty, show up from other countries for free medical then leave)

Capitalism is the liberty to use of productive capital to make wealth on ones own account.

State socialism is the complete denial of the above liberty as the state owns/controls all the productive capital, even personal skills and abilities, barring the governing officials.

Socialism is a broad term used to obfuscate the intervention by government in the use of productive capital to make wealth by individuals beyond the regulation of adverse effects on the commons.

“there is, midway between [state] socialism and capitalism, a third possibility of social organization: the system of private property regulated, controlled, and guided by isolated authoritarian decrees (acts of intervention).”

I agree with the concept of calling it state socialism, to distinguish it from other forms. In particular there is communal socialism, such as in monasteries and in the early Kibbutzes. A monastery with the vow of poverty makes something else more important than material goods to motivate folks, When folks complain about Pope Francis’s statements they forget that he took a vow of poverty as part of becoming a Jesuit. This does show that in some cases it is possible to find another incentive than money to motivate people. (Religion is an example of such incentives).

““there is, midway between [state] socialism and capitalism, a third possibility of social organization: the system of private property regulated, controlled, and guided by isolated authoritarian decrees (acts of intervention).””

To attribute the failings of socialist systems as a justification for the necessity of inequality, human exploitation, homelessness, and many other historical misgivings that present and past societies have suffered at the hands of capitalism. Is an enormous over simplifcation. For every advancement/achievement that capital boasts lays a substrata of human suffering beneath its pinnacle. The reasons why many socialist systems fail is much more complex than to simply state that it is at odds with human nature. The old adage that humans are essentially evil so a framework ie capitalism is inevitable, is being implied here. To focus on socialsms failures and to deliberatly ignore capitalisms failures shows the obvious bias of the author. There have been many examples in history where a socialist apparatus has been of great benefit. The post war British Labour goverment of 1945 introduced many socialist ideas, some of which still exist today. The Republican movement during the Spanish civil war contained many socialist ideas and seemed successful until bombed out of existence by hitlers planes. What also seems true is that when socialist societies try to take shape they face unrepentant hostility from powerful capitalist nations who would stop at nothing to undermine their progress. This also perhaps one of many reasons why most socialist societies become despotic. Capitalism in all its ugliness has been forced through the many years to compromise itself because of what in essence where ideas derived from socialism….not because of any trickle down theory or because incentives benefit all! But because ordainary people through the ages objected to the suffering caused by the greed and excesses of the few. Socialism isnt an inevitably doomed system, it just hasnt evolved. Like capitalism had to shed the skin of serfdom and slavery.

“To attribute the failings of socialist systems as a justification for the necessity of inequality, human exploitation, homelessness, and many other historical misgivings that present and past societies have suffered at the hands of capitalism. [sic] Is an enormous over simplifcation [sic]. ”

Do you realize that generally capitalist societies have far less of the evils you cite then generally socialist? In fact, since capitalism became pretty much the dominant philosophy worldwide (to varying degrees), absolute poverty has nearly disappeared?

Sorry didnt Socialism arrive as a consequence of absolute poverty? …and are you including the massive third world capitalist created debt here? World wide slumps and booms which have their consequeces everywhere? The unregulated international disasters like Bhopal. The international exploitation of child labour by profit hungry fashion companies. …just a fraction of the excess of capitalism….or are they not regarded as causing absolute poverty here?

You should reread your Marx, Gerry. Socialism has nothing to do with poverty. You will have poverty in whatever economic system that you have. Poverty is always a constant. You can not policy away poverty. We tried that 40 years ago with Lyndon Johnson’s “War on Poverty” and we still have the same percentage in poverty. No, Social Economic Systems, like socialism, communism, and capitalism, is about where the power lies.

The term socialism was first used in 1819, but was not so much a response to poverty as another attempt to implement Rousseau’s goal of eliminating the bourgeoisie, which was, in his opinion, the source of poverty. However, since Rousseau first published his “Equality” in 1758, the world has radically changed. What we now label “Third World” is the part of world that, lacking a vital bourgeoisie, still suffers the poverty that was standard in Europe, before the rise of the bourgeoisie. Of course, there were many state eleemosynary programs by governments the world over,for millennia, but the rise of private endeavor, now called “Capitalism,” was the radically new idea that changed the economics of the world where it has been allowed to flourish. Poverty in this country is sometimes defined as having no more than two color televisions in a household. Poverty in Third World countries is insufficient food. In my life time I have seen many nations move from the Third World column into the industrialized world. Japan was where they made the cheap toys from old beer cans, when I was a small child, South Korea did not matter. India, as recently as Paul Ehrlich’s “Population Bomb” in 1965, was a basket case, that should be allowed to starve itself down to a manageable population. Now, they answer the ‘phone for my bank. Socialist Mexico has a small prosperous upper class and an enormous class of desperately poor peasants, whose main ambition is to come to el Norte, to be exploited into prosperity.

No socialism arrived because people who live in their parents basements or have “their own place” over the garage like you are jealous because the world doesn’t recognize how wonderful they are. It has been tried as far back as ancient Greece and failed. As soon as the producers realized that their work did not avail them of any benefits they stopped producing and those that did not produce had no one to steal from.

garry says: “To attribute the failings of socialist systems as a justification for the necessity of inequality, human exploitation, homelessness, and many other historical misgivings that present and past societies have suffered at the hands of capitalism“…

This is the sort of reasoning that causes extortion taxation schemes to be made law and its laughingly called, “progressive“…

These progressive extortion schemes are bald political pandering by the politicians in order to buy votes from the parasites…

Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.

After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

I couldn’t disagree more. You have provided no evidence to back up your claims.
Socialism fails and will always fail because there is no incentive for a person to strive to achieve and in fact, people are discouraged from working hard lest they make others feel inadequate.

To attribute the failings of socialist systems as a justification for the necessity of inequality, human exploitation, homelessness, and many other historical misgivings that present and past societies have suffered at the hands of capitalism.

So you’re just ignorant of history? The greatest source of inequality (economic and political), human exploitation, homelessness and other historical misgivings is socialism. Capitalism is the only known system that alleviates any of those things.

People are so stupid nowadays, Walmart has to say saving money is a good thing. My brother welcomes the bag ban in his city. It is hilarious watching Agent Carter, knowing half the actors probably support the communism their characters’ don’t. Businesses hide mandates beautifully, insulating politicians from bad decisions.

“Socialism”, as defined by AEI, is the socialism that GOP presidential candidates and the Right Wing Echo Chamber rant about.

AEI knows full well Democratic Socialism is not government ownership of the means of production; or, central planning of our economy.

It is a process to return a larger share of the wealth to America’s work force. They are the ones that create it.

Call it redistribution or Government investment in its people, via taxation.

Yet, AEI keeps propping up that old failed system of the Soviet Union. That is a spin produced Straw Man. It is effective in the conservative misinformation program. The target audience is America’s ignorant and fearful. The voice originates within our 0.1% investor class and Wall Street. AEI is the megaphone.

Speaking of ranting john claims: “AEI knows full well Democratic Socialism is not government ownership of the means of production; or, central planning of our economy“….

Dude, what planet are you living on??? You’re definition of ‘democratic socialism‘ almost sounds like crony capitalism run wild…

“It is a process to return a larger share of the wealth to America’s work force. They are the ones that create it“…

So the ‘process‘ is to steal the wealth earned by those who took a chance and put up their own capital to build the business that creates the good or service others can freely buy or refuse? Did I get that right?

“Call it redistribution or Government investment in its people, via taxation“…

AEI knows full well Democratic Socialism is not government ownership of the means of production; or, central planning of our economy.

So your claim is that democratic socialists aren’t trying to increase taxes and control ever more of people’s lives? Are you just stupid or are you just a liar or both?

It is a process to return a larger share of the wealth to America’s work force.

“Return”? Nothing was taken. And “return[ed]” by whom? Oh. That’s right: politicians. Why do you trust politicians to determine who deserves what and to use the violent power of the state to enforce what politicians want?

“It is a process to return a larger share of the wealth to America’s work force. They are the ones that create it.”

Really? Well then please tell us why the workers had to go to the business owners to apply for the job that the business owner produced, rather than start their own business. Or to put it more simply – How many jobs have you ever gotten from a poor person?

You leftists have it completely backwards, as usual, since all you do is blather pseudo-intellectual argylbargle to camouflage your lazy enviousness of those who work hard, and your disingenuous use of government to legitimize the forced taking of wealth by the mobocracy. Your childish mentality never ever learns that eventually this results in decreased resources, and the entitlement mob, once addicted to graft, will not be denied. (See the Illinois state pension fiasco)

Anything purely socialist would indeed fail. Anything purely capitalist with no intervention would indeed fail (and has as well, which this article seems to brush over). Humanity needs to have more complex arguments/ideas about what system/combination of systems can be optimal for human flourishing. We have had the same ideological arguments for hundreds of years. if either system truely worked for humans… This article would not need to exist to convince the public. Let’s throw Marx and Adam Smith in the garbage and keep digging to find new solutions on how to distribute resources so all people can live in dignity.

Since poverty has existed throughout the entire human history (since man left Eden), the flaw must be pretty deeply imbedded in human nature. On the other hand, the incidence of severe poverty has gone drastically starting at about the same time free markets began to be adopted widely. Might this suggest that capitalism is a remedy to whatever the flaw is?

Poverty is the natural state of mankind. Ten-thousand-odd years ago essentially everyone was a (poor) hunter-gatherer and could own no more property than they could individually carry & protect. Mankind became, on average, steadily wealthier due in large part to the every-increasing specialization of labor. Yes, there were other factors such as mass-literacy, the codification of the various freedoms and property-rights, etc.

For all intents-and-purposes there are no poor people in the developed world. The so-called poor in the developed world are rich beyond the
wildest dreams of 99.999% of all people who have ever lived. Yes, I’m familiar with the concept of relative-poverty and I don’t buy it.

My parents and their twelve siblings grew up in truly horrific poverty during the 1920s & ’30s in east Texas. They lived in wooden shacks without electricity, plumbing or insulation. They hauled water from a stream. Sometimes the water was muddy. When that happened they would poor the water into a barrel and dump wood-ash on top. As the ash settled to the bottom it would pull down the worst of the particulate matter.

My father’s family were sharecroppers and his parents never owned a piece of property in their lives. One Winter things were so bad that they lived a man’s barn.

The first two children that my mother’s parents had died from diseases that no one dies from any more. One died from Diphtheria and the other one, a girl age two or three, just got sick one day and promptly died. They never knew from what.

For all intents-and-purposes there was no government assistance. Then, in the early 1940s a “free lunch” program was started at their one-room schoolhouse. My mother: “Do you think that my father would allow us to accept a ‘free’ lunch? Heck no, we made do and brought something from home.” Today the number of state & federal poverty-relief programs probably numbers in the hundreds and my dirt-poor grandparents wouldn’t have touched any of them. My how times have changed.

“People who govern themselves require less government.” –Mike Huckabee. “No one has right to anything that involves taking it from one individual (or group) and giving it to another.”
–Ron Paul.

Eighty-plus years a Henry Ford or a John D. Rockefeller couldn’t have obtained a Polio-vaccination, a dose of antibiotics or undergone
chemotherapy if their lives had depended on it. They would’ve looked at the things that today’s poor pretty much take for granted–cellphones that can show video of events on the other side of the world in real-time, HDTVs, microwave ovens, almost all of them living in homes with electricity & plumbing–in absolute wonder and a certain amount of envy. Can you imagine
taking a wealthy person from the 1930s on a tour of a Walmart or the average grocery store of today and telling them that virtually all of the thousands of products that he was seeing were readily available to the “poor?”

Growing up my wife & I weren’t poor but we were working-class and low-income. Said in all seriousness: I give thanks to Almighty God for the United States Army and the GI Bill without which I would not have gone to college. (Please note that I first had to *earn* those education benefits). Today, in terms of income, we are in the top 4% (the forth percentile) and our net-worth is ~$900K thanks to a combination of education, hard work, thrift, deferred-gratification and, yes, a dose of luck.

(Mom, I hope that you are resting in peace. Thank you for raising me on the traditional American values that the Left despises & ridicules today and for teaching me what *real* poverty is).

Again, for all intents & purposes there are no poor people in the developed world. –Jeff York writing from Houston, Texas

Of course, this is a bald faced lie. For pretty much the entirety of mankind’s history, nearly all humans lived at $3 per day. This only began to change as northern Europeans began to implement a shift towards a more purely capitalist system. Today, in the places you claim “would indeed fail” now have the typical human live on $150 per day, fifty times more than 99.99 percent of all humans who lived before 1800.

We have had the same ideological arguments for hundreds of years.

Primarily because people are hardwired to believe economics is zero-sum. Education can over come that nonsense, but people need to be educated to over come that nonsense.

Also, there are people like you, who lie through their teeth, as you did above.

if there’s poverty, there is a flaw in the system.

There is no poverty in the countries that moved to a more purly capitalist system. Wester Europe and North America completely eliminated poverty shortly after WWII.

Well now, that really depends on what you classify as poverty. I believe ther are people living in the Appalachian mountain area, or the hills of Kentucky or the Deep South that would be classified as ‘living in poverty’.

Well now, that really depends on what you classify as poverty. I believe ther are people living in the Appalachian mountain area, or the hills of Kentucky or the Deep South that would be classified as ‘living in poverty’

The traditional meaning of poverty is to be so poor you can barely afford to live. The people living in the Appalachian mountains and the “Deep South” enjoy a lifestyle of luxury compared to typical American just 100 years ago. No one thinks the typical American in 1916 was living in poverty. Yet these people didn’t even have electricity, something the people of today living in Appalacia and the south have easy access to.

In fact, the people living in Appalachia and the deep south have unimaginable luxuries that the typical American in 1916 didn’t have.

First and foremost, as mentioned, electricity, which brings with it the luxuries of AC, very cheap refrigeration, washers and dryers, telephones, the internet, TV’s, and so forth. ALL of these things are enjoyed by well over 95 percent of the people you claim are “living in poverty”.

Second, the vast majority of the people you claim are “living in poverty” own cars, a cheap and reliable method of transportation. No one but the richest people on earth owned cars in 1916.

Third, the medicine enjoyed by the people you claim are “living in poverty” is nothing short of a miracle compared to the typical person living in 1916. In fact, in the 1920’s the sitting president’s son died from an infection of a blister gotten while playing tennis. Only a handful of people (a couple dozen) die today in the US from the same problem. And they only die because they don’t seek medical attention, not because it’s not available.

In short, there is no reasonable definition of poverty that includes the people living in Appalachia and the deep south. Of course, by American stadards, they have a lower living standard. But Americans are the richest people in history. And relatively speaking the people in Appalachia and the deep south live better economic lives than the typical Greek, Spaniard, Italian, and a couple of other countries, countries were no one thinks the typical person lives in poverty.

Well said. Capitalism run wild as in 2008 and the Trillion dollar bailout with tax money, how easily everyone forgets the causes and endorses the same policies and attitudes all over again. Capitalism, tightly regulated so that corporations are held responsible for their products and that their bottom line is for the benefit the community, not just their investors, can work. Capitalism, when policies are laid out with means of enforcements, can be made to concern itself with the environment and with climate change. It is the result of unregulated capitalism that the result of climate change will make coastal places and marginal landscapes uninhabitable for generations to come. Causes have consequences and unlimited greed and vast inequalities that come from unregulated capitalism, will result in long lasting consequences.

Mr. Perry “revisits” his 20 year old article, but then all he does is quote his old article, which has become wildly outdated by now. The article is 99% opinion, with not evidence or numbers. This article proves nothing. He doesn’t even elaborate on part B) and C) to show why socialism “IS” failing now and “always will” fail.

Pointing at Venezuela is not very good evidence that socialism “always” fails. Venezuela is sad case of corruption, and socialism was just a vehicle for this corruption. Capitalism can be just as much a vehicle to corruption.

Point is, both systems can be used for good or for bad. Most importantly, they are not mutually exclusive systems, and can be used in harmony for the greater good. It all depends on how much we can trust our government, and right now that trust is pretty dam low in the U.S.!

According to the OECD, the average standard of living in all those socialist countries is lower than the average standard of living in West Virginia, the poorest US state (adjusting for purchasing power).

What’s also interesting is that Denmark is both the happiest country in the world, but also the largest per-capita consumer of anti-depressants.

“Pointing at Venezuela is not very good evidence that socialism “always” fails. Venezuela is sad case of corruption, and socialism was just a vehicle for this corruption. Capitalism can be just as much a vehicle to corruption.”

You’re absolutely right. The problem with every central government of any type is corruption of those in power by those support them.

It just seems that a capitalist system places more restraints on that corruption, as more people make decisions for themselves.

The U.S. has been doing the heavy-lifting of the defense of the free-world since 1945, to include keeping the sea-lanes open. Not to mention all the services & infrastructure that the U.S. has created/provided e.g. the world-wide air traffic control system, GPS, weather and communications satellites, the internet, a disproportionate amount of the research & development and invention & innovation, disproportionately funding the U.N., foreign aid. I’m sure that we could think of others.

Take the U.S. and its contributions out of the equation and all those cradle-to-grave-nanny-states either wouldn’t exist or would be no where near as elaborate as they are. It’s like the teenager who is full of himself, thinks that he/she is an “adult”—until his parents kick him/her out and cease all support. *Then* they understand what all their parents were doing for them.

socialist states: “I beg to differ. There is plenty of evidence that socialism works.

First let’s take a look at the happiest countries in the world“…

Well a whole lot depends on how one defines happiness and as one who has visited all those countries over the period of the last forty years none of those countries are the least bit enticing as a place to live – as places to visit they’re all wonderful…

Do you think there’s a middle ground, a compromise?? A way to provide incentive AND care for those who would otherwise be forgotten.
Do you think if through technology we created a “post scarcity” world where there was cheap abundant energy (solar, wind) enough food (gmo’s, efficient agricultural practices) and enough water (desalination) that it would be right to withhold those from people with lower socioeconomic status? As one of the young Americans supporting Bernie Sanders it disgusts me to see plutocrats/tycoons/capitalists/billionaires complain that they don’t have enough… And I must point out that democratic socialists are NOT proposing price controls, economic planning, or doing away with capitalism or international trade… They are proposing reforms to an obviously corrupted system that is costing lives and livelihoods
It’s sickening to see multi billion dollar corporations pay minimum wage to millions of hard working people and complain when those workers depend on social programs to make a living. I make around 100k/year plus benefits and live a very comfortable life (aside from working 6-7 days a week) I have friends and family who work just as hard if not harder and are compensated way less ie teachers police fire fighters service industry workers etc I see them struggle I’ve seen, through no fault of there own, people go into bankruptcy for medical debt
I know people who have tried to improve their lot in life through education and be set back years by staggering debt… And at the same time bank executives some of whom make more money than I would in 500 years get bail outs when they make irresponsible decisions, bail outs provided from tax dollars… Then they get million dollar bonuses AND the same govt that bails them out decided to give them tax breaks?? There is something incredibly INCREDIBLY wicked about American capitalism as it stands today. The executives of large retail chains bring in substantial amounts of money while skimping on pay for the people who make their earnings possible and driving other, often small, businesses to razor thin margins. Their employees work full time but still live in poverty that’s offset by social benefits… Benefits paid for by, you guessed it Jane Q Taxpayer, and those executives pay lower effective tax rates than me.
And in some ways the US has embraced socialism already ie social security, which is underfunded by the way because high income earners have a dollar cap on how much they pay into the system, one wonders if their money influenced that policy…
The US pays for much of it’s infrastructure from a socialist pool of money which again is underfunded because those who can refuse to pay a reasonable amount so that everyone benefits, everyone else pays, but those in the best position to help decide it’s more important to have a additional zero at the end of their account balance
The affordable care act is not perfect but it has helped out many people who were unable to access medical treatment without going broke, you’d think this would be a popular market based solution but many affluent people complain and try to eradicate it… again putting profits over people costs lives

There has got to be a way to root out the corruption, to dampen the greed, and allow the masses to prosper. And helping people with basic needs, basic human necessities and rights will not kill their drive or ingenuity. People who work now will continue to work. Innovators will continue to innovate, Steve Jobs, Elon Musk, Mark Zuckerburg, Charles Koch, Sheldon Andelson, Donald Trump and their ilk will continue to prosper. They didn’t start knowing that they’d change the world and make a fortune, the people at the top are driven by passion for what they do, not the money… And a better example… The people of France, Germany, Canada, the UK… ETC people still work, they still innovate, fortunes are still made, that is one example of socialist policies working WITH capitalism
You may be right that pure socialism can’t work but that’s not what is being proposed and a compromise between ideologies seems a Hell of a lot better than the blatant greed and contempt for humanity that is American capitalism in the 21st century
Thanks for your time, and I’d value your input if you’ve read this and have any

Since you asked for input, I would like to say that was the best written explanation of the Sanders phenomenon that I have seen. Also, it was a refreshing change of pace from the echo chamber this comments section can sometimes be. I am seen by some here as a dangerous leftist.

As you might expect on a libertarian economics blog, most people here are going to tell you you’ve got the economic wrong. Even me.

I think it’s telling and alarming that Sanders leads with minimum wage as an issue. I owned and operated a small retail store for 33 years. I sold part of it and liquidated part of it 8 years ago when I retired. My former employees are so nostalgic for their old jobs they still insist on getting together about three times a year. I always paid well above minimum wage but a doubling of it would have quickly put me out of business.

When I hired entry level sales clerks the majority of the applicants who scheduled an interview never showed up. Most of those who did were hopeless as potentially useful employees. We always found good people but we usually had to look hard.

Those applicants who couldn’t have added any value for me often found jobs somewhere else. If they were able to earn 65% of what it takes for them to live on then that’s a lot better than them earning zero percent which is the real alternative.

I support a taxpayer funded social safety net. I do not think making it illegal for businesses to hire people at low wages will do anything but make things worse for the people you think it will help.

Bernie is good at diagnosing some of the economic problems the country. That doesn’t mean he’s got good ideas on how to fix them. I saw him get a very sympathetic interview from Bill Mahar. Mahar asked him why Vermont had such a spectacular failure at implementing Obamacare. Bernie flatly refused to discuss it, saying it wasn’t relevant. It is relevant. He ought to be able to understand what’s going on on an issue he cares so much about in his own tiny state.

I’m also skeptical that more “free” college at taxpayer’s expense will lower costs for anyone other than the lucky ones (often high income) who will have their tuitions paid.

I think the original article mis-states a major point. It’s not that socialism assumes that incentives don’t matter. It’s that socialism assumes “higher motives” that will replace the “baser” incentives of capitalism. Either one believes that history supports this assumption or disproves it. What I hear from the younger people who always start out from a position of inexperience is, “That wasn’t REAL socialism. They did it wrong, but socialism would be better than capitalism when we get it right.” Ignoring actual history is what the socialists among us are great at.

There is little I can add to the excellent response from Greg G. except to point out that on several issues you seem to be contradicting yourself. If you’re interested in more input, I will explain. As it stands, your comment is somewhat confusing.

Thank You !! It’s exactly what I was wondering about this am… if a hybrid system of some sort could work. I must say, it’s refreshing to hear it from a self-proclaimed millenial Bernie supporter & to read such a thoughtful essay about it and not just some one line FB meme !

Capitalism, when combined with free markets, is a system that best benefits the consumer, not business. Remember that, it is the consumer that is most benefited by the competition fostered by free market capitalism. Everything you pointed to is not free market capitalism, but cronyism, government meddling and market intervention, etc.

Businesses would much prefer to operate in a monopoly, so they do not have to compete. No one here ever said that free market capitalism is the best system for business.

Free market capitalism is the best system for people, the consumers. Free market capitalism has been the one system in all of human history that has done the most to improve the lives of the average person. Jon Murphy mentioned this miracle of free market capitalism in this thread a number of times, which all of you have completely ignored.

That is a great video by Walter Williams . I enjoy watching it every time.

But I don’t think you understand the video or my comment DrZ.

The video supports what I posted. Free market capitalism ‘best’ benefits the consumer, not businesses. I did not say that under free market capitalism only the consumer benefits from Interactions, of course both sides have to benefit or else there would be no interaction.

My whole point was that under free market capitalism consumers get a bigger benefit due to the competitive pressures placed on businesses to provide a better, less expensive service/product in order to get consumers to interact with them.

Reread my comment and then your video and I think you may better understand both.

Several wildly wrong statements. Just because homelessness exists or poverty that does not mean that the system is broken. There will always be poverty and homelessness and these are much worse in socialist countries.
In the “ideal” European socialist countries, they did not get rich under socialism but extended more and more benefits AFTER becoming wealthy. The cost of the socialism in Europe is high and persistent unemployment (propped up of course by welfare) of 10 to 15%, especially of young people.
The idea that socialism is “just” more redistribution in the name of equality ignores the perverse effects of high taxes. Without profits, there is no money to open new stores or buy new equipment or trucks etc. Without the new investment there are therefore no new jobs. It takes money to create new jobs and only higher profits will enable higher wages to be paid. Why does Apple pay high wages? High profit margin. demanding that companies simply pay more will just drive them to bankruptcy.
The cure for an imperfect system is not to burn it down.

A second comment: in addition to perverse incentives in socialism, there is simply no way for a centrally planned economy to work. The information is too scattered and hidden. Only individuals out trying to make a buck can find this info and turn it into opportunities and thereby provide what people need. I believe Hayak (sp) put this better than I.
Some commenters claim that socialism isn’t communism but when high minimum wages are set, details of who you can hire and fire and how and when, what you can export (no crude oil exports since Carter, for example), you are getting pretty tight control of the economy and it causes problems.

Capitalism ran wild in 2008 and the trillion dollar bailout came from tax money. How easily people forget the causes and endorse the same policies and attitudes all over again. Capitalism, tightly regulated so that corporations are held responsible for their products and that their bottom line is for the benefit the community, not just their investors, can work. Capitalism, when policies are laid out with means of enforcements, can be made to concern itself with the environment and with climate change. It is as a result of unregulated capitalism that climate change will probably make coastal areas and marginal landscapes such as areas in the southwest, uninhabitable for generations to come. Causes have consequences and unlimited greed and vast inequalities that come from unregulated capitalism, will result in long lasting consequences.

Nothing about the 2008 financial crisis or the trillion dollar bailout was the result of free market capitalism.

2008 was clearly the result of government intervention in the market to inflate the bubble and then the trillion dollar bailout was more government intervention trying to prevent the market from doing it’s job of clearing out the malinvestment from the bubble caused by the original government intervention.

Unlimited greed? You mean like for healthcare, housing, college education, living wages, retirement, job training, child care and cell phones- all to be paid for by someone other than the person enjoying the benefits?

Hugh,
The real estate crash of 2008 +/- was a result of government intrusion into the real estate market. Starting in the Clinton reign, Fannie Mae and Freddie Mac pushed lenders to ease lending requirements, because the liberal politicians felt is was unfair that more people could not share in the American Dream of home ownership, Lenders under pressure from Fannie Mae, Freddie Mac, Chris Dodd and Barnie Frank, greatly eased lending requirements, creating “no-down” and “low-down” mortgages, adjustable rate mortgages, 7 & 10-year balloon payments, etc. When the inevitable and predictable real estate cycle took a down turn, all those new owners found themselves upside-down. Those new owners with no equity and no morals bailed on their loans. That caused all the lenders to dream up creative ways to unload their bad debt and they dreamed up some crazy instruments. Ultimately the markets, worldwide crashed.
Bush started and Obama continued the bailouts. There should have been no bailouts and everyone would have learned an important lesson. However, the government stepped in and no pain was felt. We are once again on the course to another collapse.

Sorry, but you don’t know jack about this. The housing bubble was not a case of low income borrowers politically bullying otherwise responsible financial institutions. Nobody had to force anybody to write subprime loans. The big players were all eager to write much more of them than they were required to because, for many years, those were the most profitable and highest interest loans.

There was astonishingly little resistance from any part of the political spectrum. the Bush Administration was very enthusiastic in supporting the growth of what they liked to call the “ownership society.”

CEO’s of big financial companies often made tens of millions of dollars a year writing subprime loans. They understood they’d get to keep that money even if their companies later blew up. They also understood they’d be quickly replaced if they told their stockholders it would be smarter to earn a lot less in the short term and lend more prudently.

There is plenty of moral hazard in this story and it wasn’t all in government. The bailouts actually worked a lot better than even their biggest supporters expected. No doubt a much more catastrophic result could have taught some “lessons.” No guarantee they would have been the right ones though.

Yeah, the federal government (HUD) did force the creation of a massive number of subprime mortgages, by establishing quotas of 30% low-to-moderate income mortgages in 1994, which were increased periodically to 56% of all mortgages in 2008. That insanely high quota virtually guaranteed a housing bubble.

HUD forced Fannie, Freddie, and all the other government/GSE mortgage lenders and guarantors to meet those quotas. In addition, private mortgage writers who wanted to expand had to follow the same quotas.

By 2008 GSEs and federal agencies held or backed 75% of all subprime mortgages. Socialism by regulation. What could possibly go wrong?

“Capitalism ran wild in 2008 and the trillion dollar bailout came from tax money. How easily people forget the causes and endorse the same policies and attitudes all over again. Capitalism, tightly regulated so that corporations are held responsible for their products and that their bottom line is for the benefit the community, not just their investors, can work.”

It was not capitalism that caused the 2008 breakdown, it was a combination of crony capitalism and big government that were the contributing factors. Big government and crony capitalism go hand-in-hand. Indeed, the governments of man tend to evolve towards too much power of the governing class. This evolution has occurred int the U.S. over the past several decades and it always occurs rapidly in socialist/communist governments.

In Kansas, Governor Brownback instituted a system that reduced taxes considerably which was supposed to stimulate the economy n Kansas through capitalism. It seems to have failed miserably with the deficit greater than ever. Does anyone have a valid explanation of why capitalism seems to have failed in Kansas.

Surely you didn’t take political speech during a reelection campaign seriously, did you? This sounds like a political failure.

The question to ask about taxation is whether the money is better spent by politicians and bureaucrats in the state capital, or by business owners and entrepreneurs in the private sector. Which group creates jobs and income?

Yet we invariably find that the developed countries at the top of the freedom index, ie with the least govt and safety nets, have the highest GDP per capita, ie production per person, far richer than those with the opposite mix. What does that tell you about which factors actually contribute to being “developed” and which are holding us back?

I just want to say I am ashamed of our country! America was created by the people and for the people. For the better part of my 35 years I have tried and failed to find much more than a glimmer of what our country once stood for. The potential I/we hold is one that can no longer wait. We are all connected to each other via social media. Yet we fail to do what’s best for the sake of the health and care of our world, our people, and the future of our children. Resources, time, and money is misused the best by political and corporate entities. With laws, rules, and regulations we are not only destroying the name of America, but also the world and our environment to which our children have to live in. I know exactly what we can and need to do. Belive in and reinvest in taking care of each other. No more private insurance companies, owning a home yet loosing it from failure to pay the taxes, and definitely no more investing a lifetime to companies that would rather find a reason to fire a person before having to pay them retirement. I didn’t want fame, fortune, or the burden of rallying a nation in order to save what our founders fought so hard to create. With the technological and social progress that we have I am amazed at the lack of utilization of the potential for changing the way we think and live so future generations can enjoy the pleasures earth has to offer. I would need to write a book to best prove that I know what a great future I/we can create, but I won’t due to the lack of guarantee the only one who cares is me. I can say that with the power of social media and networking the right person can topple the worlds economy and governments without having to kill anyone. All it would take is a mass lack of transactions and all would fall. That’s why we need radical change now more than ever because it’s not the war, but the aftermath that way will create. This is why I know a form of socialism is possible and potentially the revolution of hope, freedom, equality, and security the world needs to evolve and create a better life for the earth and its inhabitants.

obert>/b> says: “For the better part of my 35 years I have tried and failed to find much more than a glimmer of what our country once stood for“…

What was it that you were expecting to find? What supposed promises weren’t met?

“We are all connected to each other via social media“…

Sorry obert>/b>, no facebook or instagram for me – the so called social media in highly overrated IMHO…

“Yet we fail to do what’s best for the sake of the health and care of our world, our people, and the future of our children. Resources, time, and money is misused the best by political and corporate entities“…

Well obert>/b> I think that’s a bit of hubris on your part if you’re assuming what you think best is what is best – everyone has their own ideas about that…

I for one don’t about the children’s future and I believe we have the government we deserve – we did after all vote them into office…

“Belive in and reinvest in taking care of each other. No more private insurance companies, owning a home yet loosing it from failure to pay the taxes, and definitely no more investing a lifetime to companies that would rather find a reason to fire a person before having to pay them retirement“…

Only if confined to a group where 100% of those involved have agreed to be bound by the rules of the group. And even then, it may not work as the incentives provided by socialism are not aligned with the incentives that most human beings have a positive response to.

The Pilgrims were about as homogenous and in-agreement as any group could be, and socialism almost exterminated the colony.

I just don’t understand this resistance to acknowledging that socialism runs counter to known human behavior. I learned a long time ago that if your marketing plan rests on the assumption that you’re going to change human nature, the odds are heavily against success.

Ants and bees are not created equal. Their roles, their stations in life, are predetermined at birth. If you’re happy with the idea of a caste system then there in no reason at all for us not to implement “socialism.”

While I have no desire to recommend socialism, I wonder if the USSR was not safer and more secure than the more recent robber baron system. Except for the nobility, Russia was extremely poor before World War I, the October Revolution, and a civil war, made poorer by the Depression and violent suppression of dissent (not a requisite of socialism) — and then by World War II — and yet became a world power and relatively prosperous. China, too, was extremely poor and today, while it is no longer a pure communism, it is still tightly controlled by a powerful central government, state enterprises and single party. Or, to use a more shocking example, the national socialists of Germany made spectacular gains after a disastrous war, onerous peace and democratic disaster.

Socialism does not ignore incentives — although a defect of central planning is that the incentives may not be wisely chosen. Those recognizing the incentives live well — even lavishly. Thus Orwell’s lament that some are more equal than others.

Nor should we claim capitalism is the American alternative. As Bernie Sanders observed, Social Security is socialist. So are public schools. In fact, study the ten things Marx predicted would come to pass in Germany and England (not Russia or China) and see just how far the US has followed the path. No one owns their own home — all must pay rent (called real estate tax) to government. Personal property is also taxed — buy a car in many states and pay rent each year. Anything not taxed is subsidized, laws number in the millions, regulations restrict nearly every aspect of existence — and yet this is called freedom.

Governments spend about $55,000 each year for every household in America — is this capitalism? Germany and England, France and Italy — socialism has triumphed. But because it has done so under the auspices of a government ruled through universal suffrage — as Marx predicted — people think they are free, even as they condemn corporations owned — not by private individuals, but by “the people.” No one stops to think that these “public” corporations are merely a different kind of socialist institution run by bureaucrats, not owners.

Problem is, there are too many romantically in love with the concepts of socialism, communism without understanding what’s really involved and what’s the price or the results. At what price does Cuba have health care for all or are they literate? Obama thinks what they’ve done is great but does not recognize the lack of freedom or perhaps he accepts it. Some cities in Asia have safer areas than we do in many USA cities but most here won’t pay the price for that kind of safety. Even church leaders pine for a perfect world where we all just care for each other with love – equally of course. They want to act as if we have heaven on earth. Capitalism deals with people as they are and helps bring the best out of them for the benefit of the community and the individual. Examples of supposed socialism in countries are not true – there are socialistic parts of the country but they act more like free market practioners. Even China knows not to mess much with Singapore or Hong Kong if they want economic improvement

What amazes me is how many accuse Conservatives of being Nazis because they don’t realize that they, the socialists are the Nazis … Nazi is short for National Socialist … The only point of reference many people have is Hollywood & they think racism is all the Nazis were guilty of, then they falsely accuse others of racism, call them Nazis & fail to realize that their prejudice is the behavior they are condemning in others … How can we enlighten those who don’t even know they are living in darkness ???

Mark J. Perry fails to consider the ways “socialism” (really regulated Capitalism) is applied in places like Denmark, Sweden, Canada, Norway, Spain, Japan, and almost every other European nation.

Nor does the author even attempt to address the “socialist” things that Bernie Sanders is saying. If he picked those apart, this would be an interesting paper.

As it stands, it just compares extreme socialism with ideal capitalism. What we have right now is extreme, unregulated capitalism. What we need is ideal, regulated capitalism, or as people like Perry often say, “socialism”.

Capitalism has never worked worked the way it was designed to. Socialism continues to bail it our as soon Capitalism shows it ugly head. When times are good, people and business think it’s their accomplishment. When the bad times come, they run to government with their problems

This article lacks substance. The author does not explain what he means by socialism. Nor does the author provide examples of programs or actions in the U.S. or other countries that he he considers indicative of socialism and thus detrimental.

It is not the case that socialism inherently ignores incentives, nor that it embodies the belief that incentives do not matter. It is the case, rather, that socialism embodies the belief that WE (the government) can create artificial incentives that will produce a just and fair society.

The defect of that approach is that the artificial incentives arise out of a delusional view of the world and a corrupt moral system. Moreover, perverse incentives arise out of the government’s unrestrained control, causing those with power to reward themselves simply for holding power.

The inevitable result is that socialist government endorses behaviors that produce poverty and misery.

At the root of all the false incentives is this one: everybody should have the same stuff, because everybody has the same needs. They call this “economic justice.”

But everybody getting the same results is not justice, it’s the opposite: it’s INjustice. Not everybody works as hard or as smart as anybody else, and not everybody has as valuable a skill as everybody else. The income inequality that socialists view as a great evil is actually a great good. And that’s the one they seek to stamp out. The resulting incentive convinces the productive that there is no advantage to working hard, and encourages the unproductive to wait for their hand-outs.

Worse, they invariably produce cultural hypocrisy, as those with power assign themselves benefits not available to the masses, such that the people become cynical. Meanwhile, the competition for government positions turns ugly, as many power-seekers compete remorselessly for a few, privileged positions.

The result is a poor people infected with cynicism, led by a corrupt government characterized by vicious in-fighting.

without manifest destiny american capitalism would not exist,all the arguments are eurocentric biases, if it were not for theft of resources by murderous religious fanatics we would have had true democracy for all, hundreds of years ago

Right at the start, Mark Perry says “Capitalism works.” This in the face of our recent historical evidence that capitalism is failing quite dramatically; that it is failing miserably for the masses who are becoming more miserable by the day under our current system. And “under” is exactly the situation for all but those at the very top, whether considered to be the top 20%, 10%, 1% or 0.1%. When the top 0.1% owns as much wealth as the bottom 90%, something is obviously terribly wrong with our system.

Perry says that socialism is a pyramid scheme that is ultimately unsustainable. What our recent history is actually showing us is that our capitalistic system is a pyramid scheme that is failing and therefor unsustainable. Our current system incentivizes people to try to get their hands on as much money as possible without any regard for what this means for those from whom they are taking their money. The reality is that only a very few people are lucky enough to “make it” to the top in this system, while the rest struggle and stagnate or fall behind. Our current economic system is a “suck it up” system, a system that enables a few to suck money up from the many, greatly enriching those few at great expense to the many. Those who lose out are, in effect, told to suck it up, try harder, don’t be so lazy. In other words, our current economic system is a pyramid scheme through which all the money from the lower portion is sucked upwards to the few at the top. While the rich keep getting richer, a few manage to hang on, while the rest are getting poorer, and this is resulting in huge income and wealth disparities which those who are not at the top will never be able to recover from, because the rich not only have nearly all the money, but also nearly all the power. They have power because of their money, and they use that power to keep changing the rules of the game to benefit themselves at the expense of all others. There are actually two pyramids in this scheme. There is the pyramid that draws money, wealth and power up from a deep, broad base to the tiny top. There is also another pyramid, but this one is inverted, with all the wealth and power at the top and none at the bottom – in other words, a top heavy and extremely unstable pyramid. The incentives that are operating in our current capitalist economic system are actually anti-social incentives that are leading to the disintegration and collapse of society, which will also cause a complete collapse of capitalism. This isn’t theory, this is what is currently happening. Negative net worth at the bottom means there is nothing left to sustain excessive wealth at the top.

Yes, prices are determined by market forces. The market rules, and the consumers either pay the price or go without. More and more of We the People are unable to pay and are going without even basic necessities such as food, clothing, shelter, transportation, higher education and health care. Meanwhile the rich at the top have more than they need, plus far more money than any individual can possibly use. The profit-and-loss system of accounting used by the rich is – through laws they have, in effect, enacted for themselves, through their influence with their wealth – designed and intended to ensure their profit at great expense and loss by all others, because that is the only way to maximize exorbitant profits. The private property rights of the rich, behind their security gates and throughout our country, are bought and controlled through their great wealth and political influence. There is a myth of a free market economy. In reality, there is no free market. Instead there is a rigged market, with a network of convoluted rules that allow and enable it to operate in ways that are beneficial only to those at the top and hurtful to those below them. Although there are some rules that are intended to try to control businesses and limit their abuses, those rules are constantly being stretched and broken to the benefit of the rich and to the detriment of We the People and our country.

It is also a myth when a capitalist says “I did this myself.” A capitalist might have come up with a good idea and followed through with some good thinking, planning and work to achieve some impressive results, but no credit is given for all the unrecognized help that contributed to whatever success was realized. The capitalist didn’t create the country and the rules and ideals within which the business succeeded, nor build the vast infrastructure that made the business possible, nor produce all the raw materials that were used, nor create and maintain the economic and legal system that were essential for success, nor create the market place. Beyond all of this, there are countless others who provide service through their inventions, intellectual support, labor, legal assistance, transportation, maintenance and repair, custodial services, advertising and sales, communications, etc. There are also those who provide necessary dental and health care, and perhaps counseling and therapy. Yes, for every success story, some of these contributors are known and undoubtedly paid, directly or indirectly, for whatever they provided, but still they have contributed to the success. Also, countless others always go unrecognized, uncredited and unpaid because of how our vast and complex system works, especially when considering that many contributions are historical rather than current – the countless shoulders we all stand upon across generations. The point is that we are all interconnected and interdependent in all we do, whether or not we are aware of this. It is an illusion to believe that anyone does anything alone.

Our current economic system incentivizes the middle class and poor to scrabble for all they are worth to try to gain the bare necessities of life. Far too many in the USA are “struggling, and often failing, to buy food,” just as people are in Venezuela. And not only food, but clothing, shelter, transportation, health care and more. This is clear evidence that our economic system is failing and tending towards collapse. Because of the injustices and inequitabilities of our current system, countless people are losing their freedom. We are becoming more and more enslaved to a system that is controlled by a few at the top. We are being buried beneath mountains of debt, with most people having a zero or negative net worth. We are losing our freedom to choose what to eat or wear, of where to live, of where to go to school, of where to work, of where to get health care.

Here is a quote from Perry with one word changed: “The temptress of [capitalism] is constantly luring us with the offer: ‘give up a little of your freedom and I will give you a little more security.’ As the experience of this century has demonstrated, the bargain is tempting but never pays off. We end up losing both our freedom and our security.” The story of capitalism is that all you have to do is get a good education, get a good paying job, work hard, save money, and you’ll succeed, be happy and feel secure, maybe you’ll even become wealthy. Unfortunately, too many people can no longer afford to get a good education, because it saddles them with a lifetime of debt that many are currently still being forced to pay off in their retirement with their social security. Also, there are few well paying jobs available, most are medium to low paying jobs because the capitalists are cutting work forces by automating, by downsizing, by cutting benefits, by killing unions, and by exporting jobs out of the country. Working harder for longer hours, even with multiple jobs, too often doesn’t provide enough income to save anything, let alone to invest. We have lost our freedom and become slaves to an ill-fated economic system. Our personal security is weaker now than it has been for a long time and, because of that and other factors, our national security is also weakening. It’s an illusion to believe that capitalism is working. If it were working, we wouldn’t be in such a mess as we are.

Capitalism has played a major role in wrecking our national and global economy because it kills the human spirit and dulls human creativity, because very few ever get to realize the supposed benefits of enterprise, no matter how hard they work. Instead, far too many are relegated to enduring menial jobs for mediocre pay in spite of their best efforts to play the game and try to get ahead. The system is rigged to provide a few with great wealth that has been taken from the many. When the many no longer have money to spend to continually fuel the economy, it can no longer be sustained and it begins to collapse, just as it has been doing.

There is another great failing of capitalism that supporters of the system generally prefer to ignore. Capitalism is focused on maximizing profits. It does so at any and all costs, especially to our environment. Capitalism has produced a great amount of air, water and land pollution as well as other environmental degradation. This environmental degradation seriously impacts our lives, our health and our well-being, which is compounded when the effects of these results spreads into our ability to work and otherwise be productive and engaged citizens and thereby destabilizes our economy, our society and our country. Only when forced to, and with much struggle and expense to avoid it, are environmental concerns addressed, usually in only a very minimalist manner. This is one way that the true costs of doing business are avoided for the present, for the capitalists seeking their profits. The cost of this environmental degradation is instead passed on to future generations. The grandchildren of our great-great-grandchildren will hate us for what our capitalism has willed upon them. Those with a true sense of socialism would not do such a disservice to Mother Earth, our home, and to all the creatures of Earth, including our descendants.

What anti-socialist capitalists don’t understand is that the “socialism” that has been tried, but that has not succeeded in the world so far, has not been true democratic socialism. “Democratic” means “of the people and by the people,” and “socialism” means “for the people.” In other words, We the People need to design and implement a system of socialism – government, society and economy of, by and for We the People – and we need to constantly be engaged in the system to continually improve it and make sure it is not perverted.

All of the failed “socialist” systems have been imposed on the masses by individuals or groups with some personal, egotistical agenda that is based in greed for money and power, which immediately dooms any such a system to ultimate failure. Only a few selected aspects of socialism have been employed in such cases, by those in power, while they ignore or deny the essence of how true socialism, democratic socialism, actually needs to be implemented.

The essence of socialistic behavior needs to arise from within We the People, from within our hearts. It needs to arise from a sense that we are all in this Life together, that all beings are intimately and inextricably interconnected and interdependent. Only from such a sense will there arise an awareness and understanding that we all need to help each other succeed and that any real measure of success depends upon an equitable chance for all to succeed. This does not mean all will succeed equally or that there will be total uniformity. It does mean that all will have an opportunity to succeed and that all will succeed in terms of at least being able to meet certain basic necessities of life. Such a system will not enable, nor will it allow, a few to gain wealth to such an extent that many others will go without basic necessities, yet it will allow some to gain more than others, which means there will be incentive to work towards gaining more, as long as one does so in a manner that does not become unjust to others. Equity, equality of opportunity, justice and unity of purpose do not require uniformity. In fact, diversity is to be appreciated and celebrated, and viewed as enriching and essential for the success of all.

Within an equitable and just socialism, the diversity of individuals would be recognized and nurtured so each person could blossom and come to fruition in the most productive, rewarding and fulfilling manner possible. This would help each person find their purpose in life and lead a meaningful life, with nurturing and sustaining relationships. Among other benefits, this would make it much less likely that a person would become inclined to abuse drugs, fellow human being, animals or Nature. This would result in a significantly lighter load for our legal system and a drastically reduced need for incarcerating people. Those who might have trouble being sociable would be much more likely to get help rather than be punished. The results of all of this would be that most people would experience far more freedom than is currently possible, and this in turn would facilitate a much more stable society than we currently live in.

People denigrate socialism as a system of stealing from the rich and giving to the poor. That might be how it has to be made to work only when people don’t understand that we’re all in this Life together; when they don’t have any feelings of being interconnected and interdependent. But that is not the ideal to be working towards. The ideal is that the impulse to share with others needs to arise from within each heart. It needs to arise naturally within each person. Then there there would be no need for an enforced “taking” and redistributing of wealth. But first people need to learn that we are indeed all in this together, and learn to understand what that really means.

Until the majority of people, particularly those with greatest power, begin operating with a true inner sense that we are indeed all in this Life together, society – We the People – will need to collectively, through harmonious cooperation, impose rules that encourage the types of behavior that would otherwise arise naturally from people who grok how democratic socialism needs to work. But it will take We the People being engaged in the process of working together to make this happen in a just and equitable manner. This means that no small group can be allowed to take over and pervert the system for their own advantage at the expense of all others.

We the People are intelligent. We are intelligent individually and even more intelligent collectively. We, together, need to look at what aspects of socialism have already been working here in the USA, as well as elsewhere in other countries. We also need to be aware of what has been tried but has not worked. We need to figure out how to design a system that will work well for us, and then we need to work towards implementing it, with an understanding that we will need to remain engaged in the process and continue to fine tune the system in order to avoid failure, and to assure success as measured by long-term strength stability and sustainability. And the base of reference for measuring success must always embrace just and equitable opportunities for success for all, along with not letting anyone fall through the cracks, while also avoiding unreasonable gains by any few.

The doom-filled analyses and dire opinions regarding democratic socialism, as pontificated upon by people such as Mark Perry and many others, are based upon views that are stuck in the histories of poorly implemented socialist systems that have been under the control of individuals or groups who have denied or who have not understood the essence of true democratic socialism as a system that is of, by and for We the People working together. As such, they blind themselves to gaining any such understanding, and they lead others astray by discouraging them from being open to exploring and considering the potentials of any such system. It is neither realistic nor is it helpful to cite the worst possible examples of the past as a general condemnation of the ideals of what democratic socialism could and should look like. We can view poor examples of socialism as good example of what to avoid, but we should not use these poor examples to scare us away from reasonable considerations and efforts to design a system that actually works for everyone in a sustainable manner.

So, who is to blame for this insane and unsustainable situation we find ourselves in? Is it Big Business, because they have taken over and created an oligarchy? Is it the complicit politicians who have changed the rules to further enabled this to happen, with them being significant beneficiaries of this takeover? Is it an inherent and inevitable consequence of capitalism as a system? The answer to all of these is “No.” The ultimate failure is actually ours. We the People have failed ourselves. We have failed to be engaged in our political process and we have consequently abdicated our interest and power to those who have unscrupulously taken advantage of our lapse as citizens. For decades, for generations, We the People have, to a great extent, remained disinterested and uninvolved. This means that the solution is for We the People to claim our political process and our representative form of government, and then to redesign our government, economy and society so the system will work for the benefit of everyone rather than for only a few.

Senator Bernie Sanders is an individual who understands, better than most politicians, what democratic socialism means and what it needs to be. He understands that he cannot impose socialism upon the people, and he does not want to do that. This is why he keeps imploring us to become involved in our political process. This is why he says “This election is not about me, it’s about us,” and “This campaign is about bringing people together,” and “We need to work together.” He wants We the People to feel the call of togetherness within our hearts, and to become engaged in democratically creating and implementing a system of socialism that will be of benefit for all people, rather than just a few. We need to learn from the past, but then we need to let go of the past and move on to create a future to believe in. We the People can help Bernie Sanders help us do that by working together as a team – Team USA. We are all in this together, so we should embrace this reality and begin to behave accordingly.